RBI Props Up Rupee at 95 With 2-3 Year Funds as $330 Billion Trade Gap Fuels Concern
Updated
Updated · HinduPost · Aug 8
RBI Props Up Rupee at 95 With 2-3 Year Funds as $330 Billion Trade Gap Fuels Concern
3 articles · Updated · HinduPost · Aug 8
Summary
Short-term foreign money is helping the RBI keep the rupee near 95, with those inflows due for repayment in two to three years.
The support move comes as India’s roughly $330 billion goods trade deficit has become a focal point for fears about external vulnerability.
Reserve and debt dynamics are sharpening that anxiety: reserves that were about $700 billion against $700 billion of external debt six months ago could fall to $600 billion against $850 billion within three months.
Still, the report argues the trade gap overstates the problem because goods are only one part of the external account, and India posted a current-account surplus in the last quarter of the previous financial year.
That leaves the RBI’s strategy looking less like a response to an economy living beyond its means than temporary stabilization that buys calm now at the cost of future repayment pressure.